Buying Down Rate vs Larger Down Payment Calculator 2027
Compare buying down mortgage rate (points) vs making larger down payment 2027 — see which saves more over 5/10/30-year hold period.
Discount Points Math
1 point = 1% of loan amount. Reduces rate ~0.25% typically. Break-even = points cost / monthly savings. Worth it if hold past break-even (~4-6 years usually).
Bigger Down Math
Less interest over life. But you LOSE liquidity (cash is tied up in equity). Better if you can't earn 6.5% elsewhere AND you'd otherwise spend the cash.
Refi Risk
Buying down rate = waste if you refi within 5 years (lose unused points). Bigger down stays with you. Tilts toward bigger down if you might refi.
Best Choice Framework
Long hold + plan to keep loan = buy down rate. Short hold or might refi = bigger down. Need liquidity = neither, invest extra instead.
Source: freddiemac.com Points and Fees primer, cfpb.gov discount points. Last updated: May 2026.
Frequently Asked Questions
Are points tax deductible?
Yes if itemizing. Deduct in year paid for primary residence. Spread over loan life for refi or investment property.
Can lender offer different point values?
Yes. Some 0.125% per point, some 0.375%. Shop multiple lenders to find best buy-down value.
What about negative points?
Lender CREDIT toward closing in exchange for higher rate. Opposite of buy-down. Useful for cash-strapped at closing.